Irish leader Enda Kenny has announced a deal with the European Central Bank which will convert the former Anglo Irish bank debt of €28 billion into long term bonds. The interest rate will drop from 8 per cent to 3 per cent with much longer to pay.
As a result, tax increases and spending cuts will be 1 billion lower this year and in future years than expected.
Under the deal the Anglo Irish debt will be replaced with long-term bonds with far longer repayment schedules.
The Anglo Irish debt is part of Ireland’s overall €200 billion debt owed to Europe after the financial crisis.
Kenny said the deal was “An historic step on Ireland’s road to economic recovery”.
Kennedy said the bank debt was is "a heavy burden, a millstone around the neck of the taxpayer".
"Step-by-step, this Government is undoing the disastrous banking policies that brought this State to the brink of national bankruptcy," he told the parliament.
Read more news on Ireland's economy here
He said the deal was not a “silver bullet” for Ireland. “We still have along way to travel back to prosperity, the damage done by financial institutions will take many years to rectify,” Kenny said.
Earlier, Kenny has welcomed the historic decision to liquidate Anglo Irish Bank – and claimed it is ‘long overdue.’
Emergency legislation to disband the bank, now known as IRBC, was passed by both houses of the Irish parliament after hours of debate in the early hours of Thursday morning.
Irish president Michael D. Higgins made a dramatic return from an official visit to Italy to sign the legislation into law. There were fears that entities holding Anglo debts would file suit to stop the bankruptcy if the bank was not closed down overnight.
The Irish government was forced to rush through the legislation after news of the proposal was leaked by the Bloomberg agency and by Reuters.
However European authorities did not agree until today to a new deal on how the former Anglo bank debt, now Irish sovereign debt of €30 billion euros, is to be repaid leaving considerable confusion at first.
The total Irish sovereign debt to the EU stands at about €200 billion. The Anglo Irish Bank note promissory note accounts for only €30 billion of that.
The government was hoping that an overall deal including the liquidation and new more favorable terms on the Anglo debt could be announced together.
There were chaotic scenes in the parliament as Sinn Fein deputies and independents clashed with the government parties on the proposal.
Speaking after the parliament passed the legislation just after 3am, Prime Minister Kenny said: “The liquidation is necessary to secure the billions of IRBC assets that are ultimately owned by the Irish taxpayer.
“The disappearance of the former Anglo-Irish Bank and Irish Nationwide from our financial, social and political landscape is, in my view, long overdue.
“Both institutions became synonymous, both at home and abroad, with the reckless mismanagement of our banking system and economy under the watch of the previous government.”
Kenny added: “Both banks were emblems of cronyism and became a stain on our international reputation and a dent to our national pride.
“I believe that today’s agreement is a significant milestone. It closes a sad and tragic chapter in our economic and political history.”
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SInn Fein leader Gerry Adams stated that the government had merely transferred the bank debt to the Irish taxpayers and they should have refused to accept the debt in the first place. His party voted against the liquidation.
Deputy Prime Minister and Labour Party leader Eamon Gilmore said the Government was ‘doing what should have been done on the night of the bank guarantee’ which was voted in by Fianna Fail before its dramatic fall from power.
Gilmore said: “This Government is doing what the last government should have done.
“The significance of wiping Anglo and Irish Nationwide - which will live on in ignominy - out of existence will not be lost on the Irish people.
“These banks and the people who ran them, and the golden circle around them, were the very roots of the crisis which has caused so much distress to the Irish people.”
The new legislation provides for the appointment of a special liquidator to wind up the bank immediately according to a report in the Irish Times.
A senior government source confirmed to the paper that a draft of the legislation had been prepared last autumn when a similar leak of sensitive information seemed possible.
The accountancy firm KPMG will take charge of the liquidation.
Finance Minister Michael Noonan said: “They had all their arrangements in place as well with people ready to protect IBRC assets in New York, Dublin and London.
“But there were several scares in the past few months when there were substantial leaks which could have meant acting sooner.
“The board of IBRC was also kept in the dark for legal reasons. While there were a lot of people in the loop of knowledge, IBRC weren’t.”
The Bill to liquidate Anglo Irish Bank was passed with the support of Fianna Fail and the majority of independents.
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Switch to the desktop site to post a comment.jacersagain | Feb 09, 2013, 07:02 PM EST
I see my comment posted... where's Icobryan's gone to? It was a sensible post.
jacersagain | Feb 09, 2013, 06:56 PM EST
I think Icobryan told it like it is. The import of the last Irish Budget last December is beginning to bite on us Irish residents, not to mention the bites of the Budget the year before. I checked my last payslip; it showed the Irish Govt is taking 42% of my gross salary for its Exchequer, including amounts used to pay back junior bond-holding gamblers who have no right of claim on my, or my fellow Irish workers’ income. Out of the rest that they leave me with to spend on household stuff, they take another 23% in Value Added Tax. Work out the figures, taking €1000 as a base. This cannot go on any longer… “Too much ice cream” etc… can make you sick, dependent on State hand-outs that you’ve paid for others less fortunate and unable to work for the country’s benefit at lesser tax rates. Pure Economics cannot be wrong. Something has to be done to save my adult children from their lifes' time debts to people they didn't borrow from.
anglo-norman | Feb 09, 2013, 01:26 PM EST
The Irish sadly suffer from low self-esteem & an over inflated ego.
bob mcbride | Feb 08, 2013, 10:50 PM EST
When is Kenny going to do something about all the idget land developers who left their debts and mercedes cars at dublin airport before they went to hide in canada the us and australia. Why should my tax dollars bail out those idiots!
Gordan Duggan | Feb 08, 2013, 06:13 PM EST
I am nobody's enemy but I don't trust Sinn Fein as they have no conception of what it takes to run a country except at the point of a gun. Their concept of a Marxist/Socialist Republic does not appeal to the majority of people in the Irish State. Too much baggage. End of discussion.
Gordan Duggan | Feb 08, 2013, 06:13 PM EST
I am nobody's enemy but I don't trust Sinn Fein as they have no conception of what it takes to run a country except at the point of a gun. Their concept of a Marxist/Socialist Republic does not appeal to the majority of people in the Irish State. Too much baggage. End of discussion.
Gordan Duggan | Feb 08, 2013, 06:13 PM EST
I am nobody's enemy but I don't trust Sinn Fein as they have no conception of what it takes to run a country except at the point of a gun. Their concept of a Marxist/Socialist Republic does not appeal to the majority of people in the Irish State. Too much baggage. End of discussion.
Gordan Duggan | Feb 08, 2013, 06:12 PM EST
I am nobody's enemy but I don't trust Sinn Fein as they have no conception of what it takes to run a country except at the point of a gun. Their concept of a Marxist/Socialist Republic does not appeal to the majority of people in the Irish State. Too much baggage. End of discussion.
Gordan Duggan | Feb 08, 2013, 06:11 PM EST
I am nobody's enemy but I don't trust Sinn Fein as they have no conception of what it takes to run a country except at the point of a gun. Their concept of a Marxist/Socialist Republic does not appeal to the majority of people in the Irish State. Too much baggage. End of discussion.
Gordan Duggan | Feb 08, 2013, 06:11 PM EST
I am nobody's enemy but I don't trust Sinn Fein as they have no conception of what it takes to run a country except at the point of a gun. Their concept of a Marxist/Socialist Republic does not appeal to the majority of people in the Irish State. Too much baggage. End of discussion.
Gordan Duggan | Feb 08, 2013, 06:10 PM EST
I am nobody's enemy but I don't trust Sinn Fein as they have no conception of what it takes to run a country except at the point of a gun. Their concept of a Marxist/Socialist Republic does not appeal to the majority of people in the Irish State. Too much baggage. End of discussion.
seanomelb | Feb 08, 2013, 04:59 PM EST
Icobryan your ignorant comments on the Irish having low esteem is pathetic and typical of The ignorance of some Irih/Americans. Wopundeknee is another bumbling ignoramus.
anglo-norman | Feb 08, 2013, 02:26 PM EST
The Irish will never learn Icobyran
casualMBA | Feb 08, 2013, 11:57 AM EST
Blow off some steam (with its benefits), Wounde3d Knee, but, remember, the Eastern European colonizers can be dealt out after they have sustained the bards for 400 years or so.
WoundedKnee | Feb 08, 2013, 03:08 AM EST
I read about some government guy in Ireland crowing that this would save a billion euros a year for the Irish taxpayer. I've got news for this guy. You could save a lot more than a billion euros per year if the Irish stopped paying welfare, child grants (even for children who have never been in Ireland), free schooling up to college level, extra prison places, hospital care, translation services, subsidized housing etc etc. to the hordes of Eastern Europeans who are colonizing Ireland.
WoundedKnee | Feb 08, 2013, 03:04 AM EST
Some deal. Ireland formally agrees to pay back almost $50000000000 debts incurred by a private bank, Anglo--Irish--and a private gangster/banker, FItzpatrick. That's a real bargain.
Joe Glackin | Feb 07, 2013, 11:04 PM EST
@lcobryan,Good analysis on the Irish physic to a degree regarding English/British abuse.With Brian Moynihan,s economic expertise being endorsed and the first non Brit,head of the B Of E Mark Carney, seems a very secure outlook.Sterling will likely fall to 90p/Eur due to rising energy costs & M Carney,s individual belief that buying bank bonds as one option, of empowering that sector should gain momentum.The irony of Anglo bond holders to M Carny,s present actions concerning BoE remains to be realised. With two Irishmen agressively running the show of BOE and BOA a secure choice would be buying Banking stocks.Interesting to see Anglo bondholders reaction to being responsible over their investment losses, not the tax payers .Govt etc
lcobryan | Feb 07, 2013, 08:39 PM EST
Ok, must start w/this: anglo-norman is a moron. I guess he gets off on irritating others as he offers no constructive comments & apparently has nothing better to do, and, is probably permanently unemployed. Anyway, Iceland did it right. I am long 1K shares in $AAPL from 250 to 410. If $AAPL declares bankruptcy tomorrow, oh well. I invested, took the risk and lost. That's capitalism and no one will be there to cover my hit. The problem with the accommodating nature of the Irish is do to low self esteem as they are used to being violently abused by the english for so long and desperately want to reclaim their place. Of course, the Irish are a far better educated population than not only england's but the whole of Europe. Ireland, your thirst for knowledge and willing to do whatever is necessary to insure a better future built the USofA. You have an Irish-Canadian now leading the Bank of england. Buy Bank of America stock. Brian T. Moynihan is leading a tremendous turnaround. The agreements made by the prior Irish administration were ridiculous. The current accommodation is the best in a bad, self inflicted situation. The debt of a bank to their bondholders is their debt. Default. That is the risk of investment. Ask the individuals and institutions who followed Michael Milken. Disclosure: 20 years on Wall Street.
Joe Glackin | Feb 07, 2013, 08:07 PM EST
Anglo sold Sean Quinn shares based on their cooked books. Then loaned him money for buying more to keep up the share price This shows Anglo,s management etc were a failure and destroyed that Bank. When Sean Quinn was taken over due to debts owed to Anglo ,wheres the sense allowing a failed banking group take control in building and manufacturing group .The Govt were calling the shots and allowed a failed group take over a sound group who were in debt but were performing well. I know theres more than mentioned ,but this move permitted by the Govt was economic suicide
Searlit | Feb 07, 2013, 07:12 PM EST
It's like a huge mortgage refinancing, isn't it? Well, at least if it keeps them from cutting the budget and raising your taxes, it'll be some relief.
anglo-norman | Feb 07, 2013, 06:40 PM EST
Will the Irish ever Grow Up..
seanomelb | Feb 07, 2013, 04:49 PM EST
Closing the doors is just what it is. The debt is still there and the workimg men and women still have to pay it. Sinn Fein had the guts to object to this window dressing whilst the so called party of the working man(Labour)fell in line with their right wing masters the cowards.
Thomas84 | Feb 07, 2013, 02:29 PM EST
gordon duggun it was fine gael traitors who were shouting at pearse doherty that were told to be quiet. ps its your ilk that are my enemy and that issue is well past talk
IrelandNorth | Feb 07, 2013, 01:53 PM EST
Debt entrapment is the new imperialism. I restate my assertion. The buoyant Celtic Tiger economy was brought down by from full flight by politico-economic interests to tie Ireland into Europe in perpetuity. The Lisbon Treaty was the Act of Union - Mark II. Similar constitutional sleight-of-hand. Different imperial power. Who knew?
casualMBA | Feb 07, 2013, 01:48 PM EST
Many are working "in the heat of the day" to re-open, reform, and correct a "sad and tragic chapter in our history," i.e., Great Britain's "Irish" land reform.
merefalow | Feb 07, 2013, 01:14 PM EST
this stinks,the whole eu driven corrupt banking system stinks,the fact innocent taxpayers and their childrens children will be picking up this payback to a bunch of fat cat market intrest manipulating banksters stinks to high heaven.the eu is rotten and corrupt to the core,ireland and england whose debt is equal need to tell them to go screw,leave eu and print their own currency,no private banking,the country is the bank,by the people for the people,NO PRIVATE SPECULATIVE GAMBLING BUBBLE INDUCING BANKING.AND JAIL THE CORRUPT BANKSTERS.
anglo-norman | Feb 07, 2013, 01:13 PM EST
A complete lack of intelligence.courage & moral fiber...
Gordan Duggan | Feb 07, 2013, 12:53 PM EST
I was watching this historical debate on Anglo and Irish Nationwide from 10pm until the early hours of the morning. I have to say it was certainly riveting. Tv, radio and newspapers were on alert all the time. "CODE RED" was the best kept secret in Government circles until Bloomberg leaked it yesterday morning. To see the Irish Government act with such swiftness blind siding the bondholders and any court challenges which might be taken.It will take some time to kick in. The look on Gerry Adams' face was priceless and when he began shouting he was informed by the Speaker of the Dail, Sean Barrett, he would have him put out of the Chamber and anyone else who did not behave. ENDA KENNY remained call and impassive in the teeth of Adams' hysterics. Perhaps ENDA is doing something right at last! It's certainly got Europe talking.
johnbyrne | Feb 07, 2013, 11:53 AM EST
bondholders 40bl. citizens 0
herselfathome | Feb 07, 2013, 10:24 AM EST
For those who are not au fait with the Irish government's plan to ease the burden on it's taxpayers, allow me to inform you. Ml.Noonan, minister for finance,and colleagues have declared that IBRC, formally Anglo Irish Bank is to be liquidated. This in turn will ease the tremendous debt that the previous government, in it's stupidity, placed on the taxpayers.
MichaelMcGrath | Feb 07, 2013, 10:13 AM EST
Actually Ireland owes ONLY 68 billions to the EU/Troika, the rest came from the irish Pensions Fund. Anyway there is about 20 Billions over the next decade to the good for ireland after today
Thomas84 | Feb 07, 2013, 09:14 AM EST
B liquidating , they have ended any hope of getting a better deal, they officially own all of its debt and let me assure you , there will be more of it now.
Lawr | Feb 07, 2013, 08:39 AM EST
Gilmore thinks that the Irish people are morons. Won't eh be surprised when he finds out what they think of hsi letting all of those in the golden circle off the hook at our expense, our children's expense and their children's expense. Good luck, Gilmore